AUCTION PREVIEW: ACGB Sep '26 Supply Due

The Australian Office of Financial Management (AOFM) will today sell A$1.0bn of the 0.50% 21 September 2026 Bond, issue #TB164. The line was last sold on 21 May 2021 for A$800mn. The sale drew an average yield of 0.8325%, at a high yield of 0.8325% and was covered 5.1937x. There were 39 bidders, 9 of which were successful and 1 were allocated in full. Amount allotted at highest yield as percentage of amount bid at that yield was 97.6%.

• The now defined RBA taper dynamic discussed elsewhere, record levels of liquidity in the system and relative value appeal will continue to underscore demand for ACGB auctions in the medium term. The inclusion of the line in both the Sep & Dec 5-Year futures basket will also be an incremental positive (5-Year futures aren't anywhere near as liquid as their 3- & 10-Year counterparts) and should negate any roll-related headwinds for supply.
• The recent move away from multi-month richest levels in outright terms should aid demand, although yields are still some way shy of the YtD highs.
• 5s sit towards the cheaper end of the YtD range on the 2-/5-/10-Year butterfly, but may not be at levels whereby participants look to initiate longs in the belly.
• 5-Year swap spreads hover around the middle of the range that has been in play since March.
• Results due at 0200BST/1100AEST.